A three-judge panel of the U.S. Court of Appeals for the Third Circuit yesterday put the kibosh on Delaware's plan to implement single-game sports wagering.
The judges said that the plan violated a 1992 federal law banning sports betting.
Delaware Gov. Jack Markell had pushed for sports betting as a way to help resolve an unprecedented shortfall in state tax revenues and to balance the state budget. Attorneys who argued the case for the state appeared stunned by the ruling.
"We're very disappointed with today's ruling," said Michael Barlow, the governor's legal counsel.
The decision came after almost two hours of oral arguments on a motion by the four major pro-sports leagues and the National Collegiate Athletic Association challenging the denial of an injunction on Aug. 5 by U.S. District Chief Judge Gregory M. Sleet, of U.S. District Court in Delaware, that would have prevented sports betting from beginning on Sept. 1.
The appeals panel had been expected to decide only the injunction issue while the merits of the case were argued in federal district court in Delaware. A trial had been scheduled for December. (The leagues and the NCAA filed suit there last month contending that the state's sports-betting plan violated federal law.)
Instead, once the judges determined that the leagues and Delaware had no factual disputes, they decided to rule on the legal merits of the case yesterday.
An attorney for the leagues, Kenneth J. Nachbar, said that Delaware should "not be permitted to go forward with a legally dubious [sports-betting] program until the case has been decided on the merits."
The appeals court said that the state's proposed sports-betting plan violated a federal law that makes it illegal for any governmental entity to sponsor or operate a lottery based on the outcome of a professional or amateur sporting event.
The federal law carved out a few narrow exceptions, one of which was for a lottery in operation in a state "to the extent that the scheme was conducted by that state" from Jan. 1, 1976, to Aug. 31, 1990. (Delaware was one of four states grandfathered in under the law, but Delaware's sports-betting experiment was brief and limited, only permitting "parlay" bets based on the results of multiple NFL games in 1976.)
The leagues said that Delaware's sports-betting plan was illegal because Delaware never before offered single-game betting or betting on sports other than pro football.
Andre G. Bouchard and Joel Friedlander, attorneys for Delaware, argued that the particular games that would be bet on all fit the definition of a lottery and that federal law does not confine Delaware's sports lottery to any particular attribute of a game played in 1976.
In May, Delaware legalized wagering on sporting events at its three racetrack casinos. Officials had hoped that the plan would boost tourism and raise more than $17 million for state coffers this fiscal year.
Nachbar, the leagues' attorney, said that he was "pleased" with yesterday's appellate ruling.
The appeals panel said that a written opinion on the ruling would follow.
Delaware has 14 days to request a hearing before the entire appellate court and possibly reverse yesterday's court ruling, or it can appeal directly to the U.S. Supreme Court.
A top official with the Delaware Park racetrack said that the court's ruling was unexpected.
"It wasn't the news we were hoping for today," said Andrew Gentile, general manager of Delaware Park.
"Our hope," Gentile said, "was that [the leagues] couldn't prove harm, that the injunction wouldn't be issued and we'd get it up and running and show what a great thing it could be for everybody."